ASEAN anxious to push forward free trade plan

ASEAN anxious to push forward free trade plan

BANGKOK (Reuter): The six-member Association of Southeast
Asian Nations (ASEAN) will meet this week to push forward a plan
for a free trade area in the region before a Pacific rim trade
zone comes into effect, officials in Thailand said yesterday.

ASEAN economic ministers will discuss the plan at a meeting on
the Thai island of Phuket on Thursday and will also hammer out
ways to increase business cooperation between their essentially
competetive economies, the officials said.

"ASEAN has to go faster and deeper (with tariff cuts) than
GATT and APEC. Otherwise ASEAN will have no meaning," Kanissorn
Navanugraha, a deputy director general in the Thai Commerce
Ministry, said at a briefing.

The 18-member Asia Pacific Economic Cooperation (APEC) forum
intends to set up a Pacific rim free trade area by 2020,
threatening to eclipse the more modest ASEAN free trade area
(AFTA).

The scheme by APEC, which includes all six ASEAN countries as
well as their two main trade partners, the United States and
Japan, has injected a sense of urgency into ASEAN's
deliberations.

Economic ministers from the southeast Asian six -- Brunei,
Indonesia, Malaysia, the Philippines, Singapore and Thailand --
agreed in September to speed up implementation of their trade
plan, cutting the timetable from 15 to 10 years.

"ASEAN countries want to firm up the momentum for AFTA ...
They're serious in establishing firm guideposts to implement the
free trade concept in ASEAN," one senior Philippine diplomat told
Reuters this week.

To press ahead with their plan for AFTA, the ASEAN ministers
also agreed in September to cut tariffs steadily so that by
January 1, 2003, not less than 85 percent of goods traded among
the six members will face tariffs of zero to five percent.

ASEAN hopes its ambitious AFTA scheme will not only
facilitate intra-ASEAN trade but also entice more investment from
abroad.

But skeptics of the ASEAN vision point out that the six
economies do not really complement each other and are in fact in
competition, which defeats the purpose of AFTA altogether.

Only 18 percent of trade in the region is intra-ASEAN although
officials estimate once AFTA is in place the increased incentives
will boost that figure to 25 percent.

The inclusion of unprocessed agricultural goods on the AFTA
tax-cut list, which previously included only industrial goods, is
likely to be a main topic in Phuket, officials said.

"We, Thailand, are an agricultural country. We expect every
country will try to reduce the tariff on all agricultural
products, or as much as they can," said Kannisorn.

"We want to push ahead with reduction of tariffs on
agricultural products as much as we can," he said.

But while agriculturally-strong Thailand wants to see the
barriers to unprocessed agricultural goods fall, some of its
ASEAN partners are anxious to protect their farm sectors and
would be more reluctant to see tariffs disappear so fast.

"We and Indonesia are the laggards," the Philippine diplomat
said. "Our volume of exports cannot match the others."

Another issue likely to figure in this week's talks is the
inclusion of Vietnam as ASEAN's seventh member.

"There is no question Vietnam will join ASEAN but will it join
in all the economic cooperation or not?" said Kannisorn. "Vietnam
may not be ready, or some ASEAN countries may not be ready, to
let Vietnam join AFTA."